Karl Marx was possibly the first economic writer to predict the downfall of capitalism. Since the middle of the 1850s there has been a steady stream of economists and social scientists arguing that the economic system which has created unprecedented wealth for citizens of capitalist democracies, must collapse. The most famous is still Joseph Schumpeter who, eighty years ago, in Capitalism, Socialism and Democracy, wrote, ‘Can capitalism survive? No, I do not think it can’ and provided a comprehensive set of arguments which are still being debated today.

In the 1970s, several economists argued that ‘peak oil’ was approaching and the end of oil reserves would have a catastrophic impact on the global economy. They were wrong but economists, social scientists and journalists have continued in the past half-century to predict the end of capitalism due to a variety of reasons including climate change, depletion of the Earth’s resources and globalism.

One of the latest efforts is a book by the prolific Ruchir Sharma which paints a grim picture of the economic challenges confronting Western democracies (What Went Wrong with Capitalism). He notes that government spending as a proportion of GDP in the US has gone from 4 per cent in the 1930s to 36 per cent today if we include state and local government spending. The US federal government debt has been rapidly increasing since 1983 and now stands at 33 trillion dollars. An unimaginably vast sum which the Republicans, who are suppossed to be fiscal conservatives, have been unable to reduce.

Recently, English journalist Juliet Samuel, in a discussion of British economic policy, argued that an ageing population will increase demands on a failing health and social welfare system, which the ‘state is simply not productive enough to meet at current tax rates’. For Samuel, the only way out of the looming crisis ‘involves a radical reform of the state so that it can supply more with less and start nurturing rather than suffocating economic dynamism’.

The problems that Sharma and Samuel describe are not confined to the USA and Britain but apply to all Western democracies, and are just as acute here. Throughout democratic capitalist economies, politicians are confronted by rising expectations of the voters, rising costs of government and declining productivity.

The frog in boiling water is an overworked metaphor but is particularly relevant here. Putin’s invasion of Ukraine has brought home just how severe the economic challenges the West faces are. The GDP of what one can loosely call Ukraine’s democratic supporters exceeds 55 trillion US dollars while Russia’s GDP is approximately 2.2 trillion. How is it then that Russia can finance what is essentially a war against the West when its financial resources are a tiny fraction of ours? Why is it that despite universal agreement that Putin cannot be allowed to win this war, the West is unable to supply sufficient resources to support the Ukrainians who are fighting for their lives?

What this war has shown is that authoritarian capitalist economies such as those of Russia and China are not constrained by the economic realities that confront Western democracies. Putin and Xi Jinping don’t have to face an electorate which can vote them out of office. The war in Ukraine has led to more Russian deaths in two years than America suffered in its disastrous 12-year involvement in Vietnam and also the immiseration of Russia’s citizens, yet the majority of Russians still support Putin.

While Putin’s position remains secure, Biden, Sunak, Macron and Chancellor Scholz, who control the most important allies of Ukraine, may well be thrown out of office before the end of this year. If Trump is true to his word, then aid to Ukraine may be stopped and, if the other allies cannot offer additional support, Ukraine will be conquered. What we are watching with alarming detachment is a repeat of Germany’s annexation of Sudetenland. The war in Palestine is dominating the news and, across the Western world, the loony left is vandalising and spray-painting any business it sees as not offering sufficient support to Hamas. The war in Gaza is between Israel and the Islamic world and neither side is strong enough to win. It is part of the continuing struggle between the protagonists which will continue for the foreseeable future no matter what the outcome of the current fighting. Apart from the closure of the Red Sea due to Iranian/Houthi terrorism, it will have no impact upon the West.

Putin’s ‘special military operation’ cannot be allowed to succeed as, unless he is crushingly defeated, the West will inevitably be dragged into a much wider conflict. Comrade Xi will see that, if the West cannot defeat Russia, then he can invade Taiwan with absolute confidence. What Putin and Xi Jinping have in common is an indifference to the number of casualties which will result from their respective invasions. They also have the ability to tell blatant lies to their subjects without fear of contradiction. Should any Chinese journalist make a strong criticism of the current regime, they are imprisoned indefinitely. In Russia journalists who criticise Putin are often murdered.

Our own journalists are free to spout any ideological nonsense that tickles their fancy and a consequence is that citizens of the Western democracies are bombarded with conflicting messages and fail to recognise that we are in the early stages of what might evolve into a third world war. What will prevent this is a massive rearmament of Nato and middle powers such as Australia and Japan. We have to accept that, if it comes to choosing between nuclear-powered submarines, and greater expenditure on social welfare, we have to go with the former if we are to convince Russia, Iran, North Korea and, above all, China that they cannot win a military struggle.

If free market capitalist economies are to survive we have to either substantially increase rates of taxation to pay for rearmament or reduce the welfare benefits that citizens now see as their right.

For example, subsidies to private schools could stop. State schools could start charging (modest) fees. Expenditure on Medicare and the NDIS debacle should be reduced. If all this seems excessive, look at https://federalbudgetinpictures.com/debt-limit-appears-unlimited/ which is a graph of US government expenditure as a proportion of US GDP. Almost every single Western economy shows a similar pattern.

Unless we change ourselves, the Western capitalist economies will be changed by others.